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How an Accurate Post-COVID Valuation Can Help You Sell Your Dental Practice

You’re probably tired of hearing how 2020 and 2021 are “unprecedented” or “unpredictable” but the truth is we are sitting in a much different place than we were a year ago. Most dental offices are up and running again, but with stricter guidelines for how daily operations are run. Patient load in some offices is low as they strive to reduce the number of patients in the waiting area at the same time. More of the practice’s budget is dedicated to protective equipment and sanitization. 

If you are looking to sell your dental practice in Austin you may be asking yourself, how does this past year affect my valuation? Higher costs and lower collections in 2020 can’t be a good thing, can it? The good news is, every dental office in your market was affected equally by the pandemic and industry experts have developed strategies to find fair and reliable valuations. Find out how valuations have changed in the past year, and what this means for your practice.

What is a Business Valuation, and Why Does it Matter?

If you’re new to dental practice transitions you should know a business valuation is one of the most important documents you need as part of your transition. During the purchasing process the seller provides a business valuation that details every financial aspect of the practice. This document gives the buyer confidence, and is respected by banking institutions for lending purposes. 

Matt Howard, a Senior Manager at the consulting firm Blue & Co., performs hundreds of dental practice valuations each year. Before you sell your dental practice, an experienced valuator like Matt will walk you through the process. “My core value is helping you as a seller or as a buyer truly understand what is the market demanding for a practice that you’re looking at or you own today.” explains Matt. The valuators at Blue & Co. are, “trying to take the emotion out of it, trying to just really come in as that third party that gets paid exactly the same amount for every business valuation . . . and truly help you understand what is a fair price from both a buyer and a seller perspective for the practice.”

Do all business valuations work this way? Unfortunately, says Matt, the answer is no. “There’s some other entities out there that set their own prices, and it’s a one pager, and you have no idea how that value is determined.” Without a detailed report like the one provided by Blue & Co. sellers and buyers are left in the dark about what makes up the sales price. “That is not how I like to handle the process.” Matt says. When you sell your dental practice you should have a full picture of everything used to determine its value. At Blue & Co., Matt explains, “we have a very full valuation, 60 pages or more depending on the practice, that helps detail exactly how we arrive at the value. Again, transparency and intentionality is something that I love to bring to a transaction.”

How Dental Practices Were Affected By COVID-19

While COVID-19 shutdowns were not identical in time or length throughout the nation, it is safe to say every practice was affected in some way. Matt explains, “most parts of the country had some impact in March, April, and May, typically the months that we’re seeing where obviously we were either shut down for a period of time or all of that time.” 

But, as Matt points out, these three months were followed in most areas by a strong come-back, which is important when you are trying to sell your dental practice. “What I’ve seen over and over again, and I probably worked on 200 or so valuations since the closure, is we came back very strong in most cases . . . So we had three or four months of just better numbers than most practices have seen in general in their entire existence. And that’s that pent up demand, the industry trying to make up for two lost months or three lost months depending on where you’re at in the country.” 

In a normal year an individual practice showing ups and downs like this would be concerning from a valuation standpoint. It may indicate poor practice management, or something else going on beneath the surface that a buyer should be aware of. How are business valuators handling these COVID-19 related ups and downs? “In the end,” says Matt, “we have all these ups and downs in the integrity of the data, and it’s just going to make for a lot more looking at that data and making sure that whatever we use in our valuation is really the expectation of what is going to continue on in the practice post-COVID.”

Sell Your Dental Practice With an Accurate Post COVID-19 Valuation 

A typical business valuation pulls financial data from the past year in order to predict what your future practice earnings will be and create an appropriate value. “We are taking each month, and the profit and loss statement is basically the revenues minus the expenses, and that shows the profitability of the practice” says Matt. However, since 2020 was a year with so many ups and downs, how do valuations take this data and extrapolate? As Matt pointed out above, valuators are looking closely at the data and setting realistic expectations for how the practice will operate in 2021 and beyond. 

Here is how Matt explains the new process of finding an accurate value before you sell your dental practice in Austin: “we are trying to get each month of data for all of 2020. And that way what we can do is we can parse out those months that were most impacted by COVID. And . . . let’s say all three months were a wash for your practice, March, April, and May. We’ll take those out, take those three months out, and either tack on some of 2021 that we already have finalized, or going back into 2019 and adding on maybe November and December of that year. That way we can have 12 full months of data without the craziness of those two or three months.”

Overall, Matt explains, there is a continuity to how practices in certain markets shut down and reopened, which helps valuators determine what the true value of a practice is without the interference of COVID-19 shutdown data. “From a valuation component, I feel like the valuations, again, are substantially similar to what they were pre-COVID,” says Matt. “As long as the practice has shown that it was either proportionally down based on the amount of closure, or even some have been completely intact in 2020.”

Maintaining Value Before You Sell Your Dental Practice

The past year has been difficult, leading many dentists to wonder whether they should cut back their hours, take an extra few days of vacation, or retire earlier than planned. “I think that COVID has been an instigator for practice transitions.” says Matt. “I think some people woke up and realized ‘I have to figure out when my exit point is’ and maybe it’s sooner than later based on what’s going on in the world.” 

Before you take certain steps, we recommend thinking about how it will affect your practice’s value. Right now most practices are ramping up production and collections, and in some cases surpassing even their 2019 numbers. “In the end, 90% of the practices that I’ve looked at have either been proportionally down or even better than they were prior to 2019,” explains Matt. This is great news if you are planning to sell your dental practice in the near future, and a good reason to keep your numbers strong. 

Matt cautions dentists not to fall into a “slow fade” transition. As Matt explains, a “slow fade” happens like this: “It was a $1 million practice in 2017, and every year [they take] a couple more weeks of vacation, maybe trim a day, hours, maybe stop really pushing some of the dentistry that they think should be done. And at the end of the day, it ends up being a $700,000 or $600,000 practice by the time that we look at it, and that slow fade absolutely impacts the value of the practice.” 

As the practice owner you want to get the full value of your practice when you sell. Most dentists will still have that $1 million valuation in mind, not realizing the steps they took over the past few years had such a big impact. Again, Matt explains, “If it’s a $600,000 practice and it was a $1 million practice four years ago, that doesn’t matter as much to [the buyers]. They look at it as a $600,000 practice and so do the banks.”

The lesson here is that if you want to sell your dental practice in Austin you should worry less about the several months of lock-down and restrictions during 2020, and more about maintaining and increasing your value in 2021. “Sellers are still out there.” says Matt. “I do think [COVID] has been a big instigator to get a lot of them engaged. And again, I do think we’re in the sellers’ market still.” 

However, Matt also cautions that the market could flip in the next few years based on the current demographics of dental practice owners. The American Dental Association reports 37.4% of dentists are over the age of 55. This means that the market may soon flood as these dentists near retirement. “We do have older owners of dental practices, just based on the baby boomer generation [who] still owns the majority of practices.” says Matt. “So there will be a lot of activity over the next ten years or more as the baby boomers do exit practice ownership from a general perspective.”

Sell Your Dental Practice with the Experts

When you’re ready to put your practice on the market how do you learn about the process, avoid mistakes, and get the most value out of your investment? The experts at DDSmatch Southwest and our partners are here to help. One of our top priorities in every transition is transparency. We want both buyers and sellers to know exactly what to expect, be comfortable asking questions, and feel confident in the process. 

When it comes to your business valuation Matt and his colleagues at Blue & Co. take the same approach, “I mean, jumping on the phone with [the sellers] and helping them understand what the value is and how I got there and here’s the things that we consider.” explains Matt. “And they can ask questions, and sometimes they have their CPA on the phone too. And that CPA will ask questions. Again, there’s nothing to hide here. We’re trying to make it completely above board transparent, open and honest about everything that went into the valuation and how the value was determined.”

At DDSmatch Southwest we provide a Trusted Transition Process that allows you to sell your dental practice with confidence. This clear and consistent path will take you from thinking about your ideal transition to completing a successful sale. If you are 3-7 years away from retirement we recommend working with our experts to get the most out of your life’s work with our Practice Optimizer Experience. This program will walk you through everything you need before retirement, including an Ideal Retirement Calculation, Estate Preparedness Plan, Dental Insurance Navigator, and more. We will guide you through your final years of owning a practice so you can move on to the next phase of your life confidently.

Even with the ups and downs of the past year, now is one of the best times to transition your dental practice. As Matt pointed out above, you do not need to be concerned if a COVID shutdown affected your practice’s production in 2020. Take advantage of the current sellers market and contact DDSmatch Southwest for a consultation. Get started by visiting our contact page or calling 855-546-0044 today. 

Key Elements of Selling a Dental Practice in San Antonio

There are ups and downs to every dentist’s career, but no matter what, that career is more than just a job or a way to make ends meet. Dentists who own their own dental practice pour their life’s work into building a thriving office, managing the staff, and taking great care of their patients. That is why selling a dental practice can be a bittersweet time. It is more than just a practical decision, it is personal and wrapped up in the emotion of letting go of something you were a part of for twenty, thirty, even forty years. At DDSmatch Southwest we know selling your practice can be stressful, and we are here to help the transition move as smoothly as possible. What is the first step to a stress-free transition? Knowing the elements that make up a successful sale. Read below to learn how you can prepare yourself and your practice for a transition, whether you need to sell next month or ten years from now.

Knowing the Process Before You Start

Think about the major milestones in your life and how you prepared for them. For example, before starting dental school, you had an idea which courses you would take and how long you would be in school. But you did not know how difficult each course would be or the exact number of hours you would need to study. In the same way, while you cannot predict the specific details of selling a dental practice in San Antonio, it is important to know what you are getting yourself into. Learning how a typical practice transition works, and what common mistakes you can avoid, will keep you from being blindsided, stressed, or confused by the process.

We recommend working with dental-specific experts. If you already have a CPA, or you plan to use your friend as an attorney, you may be asking if you really need a “dental specific” expert. Unlike listing other items for sale, putting your dental practice on the market requires expertise that not everyone has. Reading online articles or books about selling dental practices will only get you so far. And you don’t want to pay for anyone else to try and learn it as they go. What you really need before putting your practice for sale is a team with expertise in the local market to guide you through the process. Here is a little more about each expert we recommend working with before and during your transition.

  • Dental CPA: A CPA who has worked with other dentists in managing their practices and, especially, during their transitions will be an invaluable resource as you navigate the selling a dental practice in San Antonio. Things like asset allocation and business valuation will have a huge impact on you for years after your sale is finalized, especially if you are planning to retire and live off the proceeds of your sale. Learn more about how dental CPAs can help by reading our dental transitions blog.
  • Dental Attorney: A dental attorney will help you draw up legal contracts, negotiate certain terms, and generally make sure everything that happens during a transition complies with legal standards. A dental specific attorney will have experience helping buyers and sellers, and can raise a red flag if anything in your transition is out of the ordinary or concerning. For more information on how dental attorneys can help with your transition read our interview with dental lawyer David Cohen.
  • Practice Transition Specialist: Also known as a dental practice broker, a practice transition specialist is the key to a smooth and stress-free transition. Brokers connect buyers to sellers and move the process along from start to finish. Experienced brokers have seen every type of sale and can help you avoid common industry mistakes and pitfalls.

With your team of experts, the process of selling a dental practice in San Antonio does not have to be unknowable, or surprising. For DDSmatch Southwest clients, the Trusted Transition Process provides a clear and consistent roadmap, with the right amount of flexibility to accommodate your individual situation. To learn more about this process visit our website or contact us.

Setting Goals for Your Future Transition

After you familiarize yourself with the process of transitioning a dental practice, and gather a team of trusted professionals, it is time to set your goals for the future. Goal setting takes a fair amount of introspection, but also includes talking about what you can realistically expect from a sale. What kinds of goals do you need to set? When we bring this up to our clients, three of the biggest issues are: how much do they need to make from the sale, what type of transition is ideal, and when is the right time to list the practice.

How Much Do You Need to Make?

Whether you have a specific dollar amount in mind, or simply a range, it is important to think about how much you need to make before selling a dental practice. The amount you make on your sale will impact how you live after you sell, whether you are putting the proceeds toward buying a practice in a new city, or using it as part of your retirement. Of course, this number will vary based on your individual circumstances. To determine how much you need take a look at your personal finances as a whole, especially if you are planning for retirement. Sit down with your dental CPA and financial planner to discuss your current investments, expenses, and goals for the future. Do you plan to travel during retirement? Are you moving to a more expensive city and purchasing a dental practice there? For dentists planning their retirement we recommend taking advantage of our Practice Optimizer Experience. This program will take you through the steps of planning for a successful retirement, including an Ideal Retirement Calculation. For more information about planning well before retirement visit our blog post here.

What Type of Transition Do You Want?

It may sound like a simple question, but “what type of transition do you want” is actually complex. Before selling a dental practice in San Antonio you must answer questions like:

  • Do you want to sell your practice quickly, to the highest bidder? 
  • Are you concerned with continuing your legacy, even if it means passing up the first offer? 
  • Are you looking for a partner who will eventually take on the practice? 
  • Do you want to reduce your hours before selling or keep them the same until retirement? 
  • Do you want to stay on for a period after the sale, and, if so, for how long?

These questions are just the tip of the iceberg when it comes to setting goals. Talk over your ideal transition with your team of experts and they will help you create a timeline. For example, if you want to bring in a partner who will eventually take over the practice you need to start that process well in advance of your intended sale date.

When is the Right Time to Sell?

Do you have an exact time in mind, such as next October, or a range, such as sometime in the next 3-5 years? The right time for selling a dental practice in San Antonio is based on multiple factors like:

  • Are you financially ready to move on, or do you need to add value to your practice before selling?
  • Is there an external factor compelling you to sell before you thought you would?
  • Do you have an “ideal” timeline in mind already, such as retiring by the age of 65?

One of the most important things you can do when determining the right time to sell is to make sure you are mentally and emotionally ready. As dental lawyer David Cohen explains

“I’ve dealt with some sellers in the past that think they may be ready to sell, and they’re not. And it ends up being time-consuming for all parties involved . . . If they can do the best they possibly can to begin with, really do some soul-searching and make sure they’re ready to sell. I think that’s extremely important before they start paying legal fees and spending their own time and money, and also other people’s time and money.” 

Planning Ahead When Selling a Dental Practice in San Antonio

The final element of a successful sale is proper planning. It is never too early to start thinking through your ideal type of sale and gathering your team of experts. A good rule of thumb, though, is to start planning five years before you intend to sell. This is especially important for dentists moving toward retirement. Unfortunately, many dentists nearing retirement haven’t saved enough to maintain their current lifestyles.

For this reason we recommend getting a practice valuation at the beginning of your journey. Practice valuations are typically thought of as the report you need to provide the buyer, detailing what is included in the sale and giving a true and fair value. However, practice valuations can be helpful to dentists preparing their practice for a sale because they show what you can expect to make on your practice if you sell now. Taking information from the report you can determine whether you are financially ready to sell, take on an associate, reduce your hours, and more. If your practice valuation is lower than you expected, knowing earlier will give you time to build value before selling a dental practice, and help determine the areas where you can improve.

Our transition experts work with third party valuator Blue & Co. to provide fair and reliable reports. Each 70 page report provided by Blue & Co. details every financial aspect of your practice, taking into account years worth of data and trends to determine a fair market value. Matt Howard, dental CPA and certified business valuator, explains, “our job in this process is to really help really work through the practice financials, the historical financial statements, and just basically help sanitize or normalize the numbers as we see them [so] the true operations of the practice are reflected.”

Oftentimes dentists are surprised when they receive their initial report, not realizing what a big impact they can have on their practice when they choose to reduce their hours, spend more on marketing, hire additional hygienists, and more. After taking a look at your practice valuation you can make an educated decision when it comes to things like hiring an associate. Again, Matt Howard explains, “Every practice has a limited amount of resources, of ops, of time for the staff to not hit overtime. So there’s a lot of variables at play here.” This is one reason why we advise that, five years before you plan on selling your practice, make sure you are using all of your resources to build value.

Selling a Dental Practice in San Antonio? Contact the Experts

As you can see, a lot goes into selling your dental practice, and the earlier you start preparing the more successful you will be. Familiarizing yourself with the elements of a successful sale is just the beginning. However, you shouldn’t need to be an expert in the market to complete a successful sale. All you need is the right team to guide you through the process.

At DDSmatch Southwest you will find just that. Our experienced brokers have completed many sales throughout Texas and New Mexico, always focusing on helping buyers and sellers have as smooth a transition as possible. With our Trusted Transition Process you don’t have to worry about details falling through the cracks. 

If you’re thinking about retirement ask about our Practice Optimizer Experience. This program was created for dentists who are 3-7 years away from retiring and selling a dental practice. It helps dentists prepare for retirement by completing important steps like preparing your estate, evaluating insurance, and building value in your practice. Our experts can also help identify areas of your practice that are underutilized in order to take advantage of growth opportunities.

Whether you are ready to put your practice on the market today, or you just want more information about the elements of a successful sale, contact the experts at DDSmatch Southwest. During your consultation we will help you determine your goals for the future and map out a successful practice transition. Visit our contact page or call 855-546-0044 to get started today. 

Cost Effective Ways to Build Value Before You Sell Your Dental Practice

Owning your own dental practice is more than just a job. As a small business owner you care for patients, pour your time and energy into building your practice, make day-to-day business decisions, and manage employees. When it comes time to sell your dental practice, how do you know you will reap the benefits of the time you poured into the practice? Unfortunately, many dentists in Austin don’t think far enough ahead and make small mistakes that end up costing them big when it comes time to sell. When you’re five years away from selling your practice it is time to start thinking about building value in your practice.

Investing in Your Practice Before Selling

There are two extremes when dentists think about preparing their practice for sale in Austin. The first is to pour as much money into the practice as possible, with the idea that they will get it back, and then some, after the sale. These individuals remodel their office, buy new dental chairs for every exam room, upgrade their digital equipment, revamp their websites, and more. This approach can easily cost tens of thousands of dollars. These doctors are not likely to recoup this investment when they sell their practice.

The second extreme we see is to do nothing. Dentists who have been practicing in the same office for 30 years do not want to bother upgrading anything just a few years before they retire. Why waste money upgrading your billing software and training your staff when the next owner might switch to a different system right away? These dentists will likely see less interest in their practice and may not get what they could have from the sale.

So, which is the right way to go about things? The answer is: neither. After over 20 years in the dental industry, our team of transition experts has seen it all. The truth is, most dentists will land somewhere in the middle of these two extremes. No matter what, it is a good idea to get a preliminary practice valuation to see what your practice is worth now, and learn how you can increase that value before you sell. Our team works with the valuation experts at Blue & Co.  to provide fair and reliable practice valuations. Learn more about what goes into this report by visiting our dental transitions blog. If you’re just getting started, there are a few low-cost ways to upgrade your practice and get the most out of your sale.

Replace Your Handpieces Before You Sell Your Dental Practice

Despite the wide availability of electric handpieces, Dental Economics reports less than half of dentists use them. Dentists who still use air-driven handpieces often ask what the advantages of switching to electric are, considering the cost to upgrade. While making this switch certainly isn’t a “must have” for every dental office, we think the advantages outweigh the cost most of the time. Here are just a few ways you and your patients will benefit:

  • Torque: Electric handpieces provide consistent, and higher, levels of torque when compared to air-driven devices. This allows for smoother and more efficient work. Not only will your patients appreciate this, it will allow you to work more quickly and increase your patient load (increasing your production and, therefore, the overall value of your practice).
  • Noise and Vibrations: While dentists are used to the noise and vibrations of air-driven handpieces, many patients are made uncomfortable. In addition, the chattering caused by air-driven handpieces can produce a less efficient cut. Electric handpieces are more comfortable for the patient, and provide a smoother cut. Happier patients are more likely to return, and a stable patient base is integral to practice valuation.

If you are considering purchasing a new handpiece before you sell your dental practice in Austin, look into electric handpieces. There are plenty of models to choose from, with varying price levels and features. When you’re looking for the right model consider the attachments included, how much the model weighs, and how much maintenance it requires. 

Electric handpieces are relatively inexpensive, but they can add great value to your practice, which is why we recommend this upgrade for many dentists. Increased comfort and efficiency will mean higher levels of satisfaction from patients and a greater number of patients served. Both of these factors will increase the value of your practice. Still unsure if new handpieces are worthwhile? Check out Dental Economics in-depth review of the pros and cons here

See the Difference with an Intraoral Camera

Much like electric handpieces, intraoral cameras can add great value in terms of patient satisfaction. In addition, they aid in establishing a trusting relationship between patient and provider, whether you are just getting your Austin practice off the ground or are ready to sell your dental practice. 

During an exam, you and your team take note of areas that need extra attention, but your patients must simply take your word for it. Established patients typically have no problem with this, but newer patients might be more skeptical. An intraoral camera shows patients much more than they can see in a handheld mirror. With the help of an intraoral camera your patients can see exactly what you see, lending increased legitimacy to your recommended treatment plan.

In addition to seeing things like cavities, intraoral cameras can be used for patient education and increased buy-in when it comes to routine dental care. Show your patients the spots they tend to miss when brushing and flossing. Use pictures to document your patient’s progress over time so they have evidence of how routine dental care, or lack thereof, impacts their oral health.

At this point you may be asking, as a dentist with a well-established practice, why do you need this upgrade? If you’re planning to sell your dental practice in the next five years you need to make sure that you are growing, and your patient retention rate is high. With the help of an intraoral camera your current and new patients will have increased confidence in you, be more likely to comply with your treatment recommendations, and recommend you to their friends. All of these factors lead to an increase in production which boosts the value and attractiveness of your practice.

Give Your Practice a Fresh Face

How long have you practiced at your current location? For Austin dentists preparing to retire and sell their practice the answer could be 30 years or more. During that time funds were likely directed towards things like upgraded equipment and marketing campaigns rather than a new coat of paint or updated decorations. And, as long as the wallpaper is not starting to peel and there are no unsightly stains on the carpet, that was not a problem. However, when you are preparing to sell your dental practice in Austin you should try to think both like a patient and a potential buyer. 

We typically do not recommend remodeling your entire office, but small cosmetic upgrades can be a good investment. If you’re having trouble deciding what needs to be upgraded around your office try this simple exercise. Park in the patient section of the parking lot and imagine you are arriving for your first appointment. How does the outside of the building look? Curb appeal is important, even for dental offices. Enter the waiting room and sit in the chairs. Are they sagging or cracked? Does the paint or carpet have stains? Does the waiting room feel welcoming? Continue through the office taking note of the sights, smells, and atmosphere. Recruit your office staff and hygienists in this exercise as well, they will likely have an opinion if asked. A few small upgrades will go a long way in making your office feel more inviting, without breaking the bank. 

Making the Switch to Digital Before You Sell Your Dental Practice

The use of an x-ray machine is invaluable in dentistry, and technology in this area has come a long way in the past decade. However, not every dentist has changed with the times, and a significant number are still using outdated x-ray machines. Many dentists who are nearing retirement do not see the point in upgrading to digital radiography. Between the cost to install a new system and the learning curve for the dentist and staff it simply does not seem worthwhile. 

While these arguments are valid, what they fail to recognize is that digital radiography isn’t just the future of dentistry, it’s the present standard. Younger dentists have not been trained on older x-ray machines. They will be less likely to buy a practice that has not been updated to digital technology as this will require that they either learn quickly how to use the older system, or immediately invest in a new system. Investing in digital technology is not inexpensive, but in most instances it is worthwhile because it increases your practice’s value, and makes it much more attractive to buyers. 

What to Avoid Before You Sell Your Dental Practice in Austin

As we mentioned above not every investment in your practice is worthwhile when you are preparing your practice for sale. Large equipment purchases, other than making the switch to digital, typically do not bring a return on investment. Unless your equipment is malfunctioning or your software is out of date to the point it is unusable, we recommend holding off on replacing it.

Our best piece of advice for dentists preparing to sell their practice is to avoid making rash decisions. Think through the usefulness of each purchase, consider whether it will add value in the short term, and ask for the advice of your dental CPA and practice transition specialist. Making the right kinds of updates, like those mentioned above, will add tremendous value to your practice. Some updates we recommend avoiding before you sell your dental practice are:

  • New Furniture: Too often we see dentists replacing perfectly good waiting room furniture or dental chairs simply because they are the “wrong color.” Unless the furniture is broken, stained, or frayed, most buyers will not care or notice if you replace them.
  • Billing Software: Your office staff is used to a certain flow, and even if a new billing software promises more efficiency, there is always a learning curve. Slowing down collections in order to train your staff is not useful when you are trying to build value in your practice. That said, if your software is so out of date it is difficult to use, it may be a good idea to replace it.
  • Anything that Provides Long-Term Value: Plenty of equipment in your dental office is made to last a decade or more. This is great when you are first starting out, as your cost per use goes down over time. However, if you are making a large equipment purchase and planning to use it only for the next three years until you sell your practice, it does not make sense to buy.

Market-Driven Decision Making

When you are planning to sell your dental practice in five years or fewer, it is a good idea to invest in your practice in practical, cost-effective ways. Your goal should be to increase production, decrease overhead, and make your practice as appealing as possible to buyers in your area. This is why it is so important to work with a team of experienced professionals including a dental CPA, dental attorney, and dental practice transition expert. Your team will help you determine which upgrades are worthwhile, and which are a waste of money and time. 

One of the biggest factors in determining which upgrades are worthwhile is your local market. Dental practices in Salado will not have the same needs as practices in downtown Austin. In fact, it might make sense for one of those practices to remodel their office, while the other practice only touches up the paint. Working with a transition expert is key to determining the needs of your specific practice.

If you are considering selling your dental practice in the Austin area, or anywhere in the Southwest, contact the practice transition experts at DDSmatch Southwest today. With over 20 years in the industry we can help you determine which steps will add the most value before you sell your dental practice in Austin. Set up a consultation by visiting our contact page or calling 855-546-0044. 

4 Tips For Dentists Selling a Dental Practice Before Retirement

One of the best things about owning your own dental practice in San Antonio is knowing you have the power to choose how your career progresses. You decide when the time is right to plan a future transition, take on an associate, selling a dental practice, and retiring. Knowing this, you may assume that many dentists choose to retire earlier than individuals in other professions, reaping the benefits of a lucrative career. However, according to the American Dental Association, the average age of retirement for dentists was 69 in 2017. Not only is this more than the U.S. average retirement age of 63, it is an increase from 2001 data which found the average dentist retiring at the age of 65

There may be several reasons for this, one being that dentists love the work they do and choose to practice longer. According to U.S. News & World Report dentistry is in the top 10 best jobs in part because of the high salary, low stress, and great work-life balance. Another reason dentists might retire later may be that they aren’t financially ready to retire and maintain the lifestyle they have become accustomed to. Many dentists are not aware that in order to retire they will need to save a significant amount of money in addition to the money they will get from selling their practice. 

How do you ensure you land in the camp of dentists who can retire when they want? Between your current investments and selling a dental practice in San Antonio you should have enough money to carry you through your final years living the lifestyle you want. Retirement success isn’t something you stumble into, it is something you plan carefully for. Read our tips below to learn how you can start preparing today to retire on your terms.

Tip #1: Look at Your Lifestyle

The ADA reports, “The average net income for dentists in private practice in 2019 was $204,710 for general dentists and $343,410 for specialists.” This income is far above the U.S. average net income of just over $51,000 in 2019. These numbers likely come as no surprise to most dental professionals, but it is important to point out that a larger average income likely means higher average expenses. 

There is nothing wrong with having higher expenses, in fact you should be able to enjoy life both before and after retirement. However, make sure you account for all your expenses when planning for retirement. Think about both the lifestyle you currently lead and your retirement goals. Will your current investments and the profits from selling a dental practice allow you to do things like travel, eat out, and live comfortably during retirement? Or will you need to scale back your expenses in order to make your money last? It is important to note that retirement could last 25 years or more. If you do not have enough money set aside to maintain your current lifestyle and retire in the next few years you need to determine what your priorities are. Do you want to cut back your expenses so you can retire sooner, or work longer than you planned in order to put aside more for retirement?

These are obviously very personal and individualized decisions and should be made with the help of an experienced financial planner. At DDSmatch Southwest we encourage our clients to review their investments regularly, especially as they move closer to retirement. As part of our Practice Optimizer Experience we partner with HK Financial Services to perform a Retirement Check-Up. The experts at HK Financial Services will review your investments and projected future income in order to help you plan and time your retirement, including when selling a dental practice makes the most sense. This Ideal Retirement Calculation can be done in tandem with your current financial advisor, or simply as a supplement. Either way, it is important to get a full picture of your financial situation well before retirement so you can retire on your own terms.

Tip #2: Know How Much Your Dental Practice is Worth

You probably know how much money you have in your checking and savings accounts, what your investments are worth, and how much your home is appraised for. But do you know how much your dental practice is worth? Your dental practice may represent a large portion of your net worth, and will impact how much money you have to live off of during retirement. For that reason, it is almost impossible to make a retirement plan without an accurate estimate of your dental practice’s value. Unfortunately, many dentists nearing retirement rely too heavily on their practice’s perceived value without actually knowing what that value is. When it comes time to sell they are left with a smaller nest egg than they thought.

How do you get an accurate picture of your practice’s worth? Selling a dental practice in San Antonio involves more than just calculating the average of the practice’s collections in the past few years or finding the value of the equipment included. Our business valuation partners at Blue & Co. provide clients with a 70 page report detailing every financial aspect of the practice. They review specifics and ask questions such as, why did your marketing expenses increase by 10% in one year? Did that 10% increase result in an increase in revenue? In a post-COVID market it is especially important to parse out these financial details. Sterilization costs likely went up in 2020, while patient loads were down. However, as the industry recovers, your costs should follow a predictable curve. An expert valuation will account for situations like this. For more information on how practices are valued post-COVID visit our dental transitions blog. 

Our Practice Optimizer Experience recommends dentists who are planning to retire in the next five to seven years have two valuations performed. The first valuation at the beginning of your journey will show you what your practice is worth right now. Getting a clear picture of your practice’s worth well in advance of selling a dental practice in San Antonio is helpful for several reasons. 

  • You and your financial advisors can use the information to more closely estimate your net worth, and determine whether or not you are on track to retire on your timeline. 
  • If your practice is not valued as highly as you would like you can use the valuation to set growth goals. The transition experts at DDSmatch Southwest use Dr. Charles Blair’s “Practice Booster Clinical Treatment Analyzer” to uncover your practice’s unused potential and maximize growth.
  • You can use your valuation to plan out how much you need to work before retirement. Taking steps such as reducing your hours or adding an associate will affect your practice’s value, and you need to make sure your practice is prepared for the changes.

Then, when you feel you are ready to list your San Antonio practice, it is time for the second valuation. This valuation is what will be presented to your buyer. The valuations performed by our partners at Blue & Co. are accurate, fair, and trusted by banking institutions. For more information about what goes into your valuation contact our team of transition specialists.

Tip #3: Your Roadmap to Selling a Dental Practice

Once you know how much money you need in order to retire on your terms, and what your practice and investments are worth, it is time to make a roadmap. First, if you do not already have a team of dental transition experts in place it is time to gather them. Your team should include a dental CPA, dental attorney, and practice transition specialist. These experts will guide you during the final years of your career, helping you make decisions that will benefit you in retirement. For example, your team may help you determine whether buying new equipment for your office will result in a return on investment or just wasted money. 

When you have a team of trusted advisors in place you need to answer some important questions about how your final years will play out. A few things you need to review are:

  • If you do not have enough money to retire when you want, how can you add more to your nest egg?
  • Are you looking for a buyer who will pay top dollar or are you more concerned with maintaining the legacy you have built after selling a dental practice?
  • Do you want to take on an associate to cover some of your patient load while you make a gradual exit? Your advisors will help you determine whether your practice is financially able to carry another dentist and how that will affect your current lifestyle.
  • Is there a date you must sell by? How flexible are you with your timeline?
  • If you need to increase your practice’s value before you sell what are the best ways to do so, and when will you need to start these processes in order to get the best return?

As we mentioned above, DDSmatch Southwest partners with HK Financial to help our clients plan out their financial future. The experts you work with will help you map out your ideal retirement, giving you steps to make that dream a reality. Do you want to travel more after you retire? Buy a vacation home? Help your grandchild pay for dental school? If you do not have a big enough nest egg to support your ideal lifestyle your financial advisor should help you determine how much you need to put away in order to meet your goals, in addition to your current investments and the proceeds from selling a dental practice in San Antonio. 

A dental CPA is also invaluable in this process, as they will give you information on the tax benefits of certain retirement accounts, investments, and more. During the process of selling your practice your dental CPA will advise you on asset allocation, which determines how much of the money from the sale you actually keep. If you do not already have a CPA who works specifically within the dental industry talk to one of our transition experts for a referral.

Planning at least five to seven years ahead of your intended retirement date will give you more control over your career, allow you to finish well, and leave the legacy you intend. With the right team in place you can be sure your interests are being promoted at every turn. A detailed, yet flexible retirement roadmap will allow you to move confidently toward retirement knowing no details are overlooked. 

Tip #4: Contact Dental Transition Experts Before Selling A Dental Practice In San Antonio

How far away is retirement for you? The earlier you start planning for retirement the easier it will be to transition on your own terms. Even if you are just starting your career in dentistry you should be thinking about the future and putting money away for retirement. If you aren’t sure where to start, or if now is the right time, contact the DDSmatch Southwest transition experts. Our team works with dentists at every stage, but we offer a special experience to those transitioning into retirement. Our Practice Optimizer Experience was developed for dentists who are within 3-7 years of retirement. Your transition experts will walk you through these steps, ensuring no detail is overlooked.

  • Conceptual Transition Experience
  • Trusted Valuation Analysis
  • Ideal Retirement Calculation
  • Estate Preparedness Gameplan
  • Dental Insurance Navigator
  • Clinical Opportunity Blueprint
  • Critical Metrics Analysis
  • The Trusted Transition Process

Our job at DDSmatch Southwest is to ensure a smooth transition for everyone involved. We know that for dentists moving into retirement there is a lot of stress involved with selling a dental practice. We are here to take some of that stress away through planning, preparing, and prioritizing for your future.

Whether you are ready to list your San Antonio practice today, or the process is still years away, we are here for you. Request a consultation with our dental transition specialists by visiting our contact page or calling 855-546-0044. 

How to Add Value Before You Sell a Dental Practice

Your dental practice represents years of hard work, a career spent building your patient base, training employees, and forming relationships with the community. When you decide it is time to retire and sell a dental practice in Texas and New Mexico, how can you be sure you are getting the true value of your investment? When retirement is three to five years away, it is time to consider whether you can build additional value in your practice.

Making a Plan for Success

Before you take any steps toward selling your practice you should have an idea of how much the practice is worth, and how much you need to make on the sale in order to retire the way you want. If you don’t know where to start contact one of the DDSmatch Southwest practice transition specialists. Our Practice Optimizer Experience was created especially for dentists planning on transitioning their practices in five to seven years and covers everything you need to help you plan for the future. The first step is simply sitting down with one of our transition specialists to determine your vision for the future. What goals do you want to achieve before and after you sell a dental practice? What is your ideal transition timeline? Once you lay out some of these specifics you can create a roadmap to retirement success.

Why Business Valuation is Crucial to Building Value

You have likely heard of business valuation as something you need in order to determine the value of your practice before a sale. A business valuator will look at everything involved in your sale, from the physical equipment to your monthly cash flow, and determine its economic value and appropriate sales price.

At DDSmatch Southwest we recommend those moving toward retirement should plan to have two valuations performed. The first analysis will be at the beginning of the process, three to five years before you plan to list your practice. This valuation will give you a full understanding of what your practice is currently worth, and provide insight into how you can increase the value before you sell. For dentists moving toward retirement this first analysis is crucial for wealth management purposes.

Any business valuation done before you sell a dental practice in Texas and New Mexico should be performed by third party valuation experts, which is why we partner with Blue & Co. for fair and reliable valuations. The experienced professionals who perform your analysis will take a holistic approach to finding your practice’s value. 

Matt Howard, a dental CPA, accredited business valuator, and certified valuation analyst, explains the process saying, “The first part of the business valuation always has historical numbers of the practice.” After looking through these historical numbers, Matt explains, “We’ll go through the data. We’ll enter it into our models. We’ll ask very specific questions about that data… We want to really understand everything that’s going on inside the practice,” Once they have finished their analysis, including gathering and incorporating feedback from the seller, they will provide a detailed report. 

Ideally your valuation will show that your practice is worth enough to carry you through retirement. However, this isn’t always the case. What happens if the value of your practice does not match up with your goals for the future? The good news is, most dental practices have significant, untapped opportunities for growth. Value can be added in many ways before you sell a dental practice, but as you inch closer to retirement you must be careful how you spend your time and money, as not every investment will yield a return.

Remodels and New Equipment: Is Now the Time to Invest?

One method some dentists turn to before listing their practice is remodeling the office space or buying new equipment. This method, according to Matt Howard, is not always effective for dentists who are selling their practice within five years. “Significant remodels at that point would probably not be a complete one-for-one return on your money” says Matt. 

Of course, there are several exceptions to this rule. For example, if your practice has not made the switch to digital technology now is the time to invest. The reason for this is that many dentists are not trained to use the older equipment, especially if they are newly out of dental school. Not only will new digital equipment increase the value of your practice, it will make your practice more marketable. 

One other area that is an exception is a basic tidying and sprucing up of the office. When you sell a dental practice in Texas or New Mexico you want to put your best foot forward. Housekeeping tasks such as a quick coat of paint go a long way in making your office look nice, without spending thousands of dollars on a remodel or brand new equipment.

Before making any large purchases or major renovations talk to your team of experts. Your dental CPA can explain any tax implications, and your transition specialist will be able to advise you on whether your plan will attract more buyers. Remember to keep your end goal in mind: a successful transition into retirement.

Maintaining Your Practice’s Value Through Production

Unfortunately one of the steps many dentists make in preparation for retirement is to slowly decrease their hours. While there is nothing wrong with wanting to make a gradual exit, you have to be aware how it affects your practice’s value. When you sell a dental practice the buyer will want to see evidence of its value through production. According to Matt Howard, “A decreasing revenue stream in the valuation world is not exactly ideal. What we like to see is [the practice] either consistently growing by inflation or at least steady in the collection perspective.”

If one of your transition goals is to slowly decrease your hours to one or two days per week, consider bringing in an associate to pick up the slack. With two doctors in the practice this method can even lead to increased production and collections, bringing your value up even more before you list your practice. However, there are other considerations when bringing in an associate and you need to make sure your practice can support an additional doctor. Visit our blog to learn more about the advantages of bringing in an associate before you sell.

Increasing Value Through Your Patient Base

Whether you choose to maintain your current hours, or bring in an associate so you can decrease them, you need to make sure your practice is still bringing in and retaining new patients. Ideally, in the three to five years before you sell a dental practice in Texas or New Mexico, you should have 25-30 new patients each month, with a 12-14% attrition rate. If your practice isn’t meeting these benchmarks, try to find out why. Some factors to look at include:

  • Marketing Efforts: Is your marketing strategy bringing in 25-30 new patients each month? If not, take a look at your current strategy and determine how you could adjust it to bring in more new patients.
  • Patient Turnover: A new patient may visit once, but if they do not make a second appointment they cannot truly be considered an active patient. Focus on turning new patients into active patients.

Patient turnover can have several causes. Investigate your current method of appointment scheduling to ensure it is easy and quick for patients to accept their care plan and set up their next appointment. Take a look at the overall patient experience. From the time a patient walks in the door you want to ensure they are greeted warmly and feel comfortable. An increasing patient base is one of the most valuable parts of any dental practice, which is why it is crucial to understand and get control of before you list your practice.

Revisiting Insurance Payments Before You Sell a Dental Practice

When was the last time you examined the insurance makeup of your practice? A significant number of patients choose their dentist based on their insurance benefits, which is why you need to take it into consideration when you are trying to build value before a sale. Look at the plans you currently work with, and consider the profitability of each one. As in any business, you should only offer services that bring a profit. 

If the services you are offering under a specific insurance plan are not profitable it is time to rethink your participation in that plan. After looking at the data some dentists decide to go out-of-network with certain insurers, but this isn’t the only option. Depending timing and where your practice is located you may be eligible to renegotiate plan rates. No matter what you choose, keep in mind that your end goal is to build your patient base and increase your practice’s value.

Sell a Dental Practice and Retire with Confidence

One of the best things you can do at the beginning of your retirement journey is to seek out the advice of a dental practice transition specialist, dental CPA, and dental attorney. These professionals have seen numerous dental practice transitions, and know what works when you are trying to build value. With a panel of trusted advisors you can be sure that you are making the right choice every step of the way.

As we mentioned above, the transition specialists at DDSmatch Southwest created a roadmap for dentists heading toward retirement, providing expert advice at every stage. Our Practice Optimizer Experience has helped countless dentists plan, prepare, and prioritize for their future. Here is what you can expect:

  • Conceptual Transition Experience: Sit down with our experts to determine your goals for before, during, and after your transition.
  • Trusted Valuation Analysis: As we detailed above, a reliable business valuation is crucial to anyone listing their practice. Our business valuation partners will analyze your practice twice, once at the beginning of the process, and once before you sell a dental practice.
  • Ideal Retirement Calculation: A financial review of all your investments and projected future income is needed to ensure you can retire comfortably. DDSmatch Southwest partners with HK Financial Services to provide a Retirement Check-up, either as a third-party opinion or alongside your current advisor’s calculation. 
  • Estate Preparedness Gameplan: Your estate should be prepared and protected in the event of an unforeseen death or disability. Our experts will refer you to a local attorney to create essential legal documents such as a will or trust.
  • Dental Insurance Navigator: As we touched on above, you should review the insurance plans in place before listing your practice. We arrange a customized consultation with Shelley DeGroff of Integrative Dental Solutions, a PPO Advisor, who will advise you on your current payer mix. 
  • Clinical Opportunity Blueprint: In order to pinpoint untapped growth opportunities in your practice we use Dr. Charles Blair’s “Practice Booster Clinical Treatment Analyzer.” This 70-page report will reveal ways you can add value before you sell a dental practice.
  • Critical Metrics Analysis: Your practice is constantly changing, especially as you focus on adding value before retirement. We provide periodic, customized reports aimed at keeping your practice producing at a high level.  
  • Trusted Transition Process: When you are ready to move forward with your transition our experts will start you on our Trusted Transition Process™. This roadmap lends transparency to the process of preparing and listing your dental practice, and will carry you through to the other side of your transition. 

While we are able to give general advice that applies to most dental practices in Texas and New Mexico, your specific practice needs a specialized approach. The transition specialists at DDSmatch Southwest have helped hundreds of dentists buy and sell practices across Texas and New Mexico, bringing a wealth of knowledge to the process. It is never too early to start planning, preparing, and prioritizing for your future. 

If retirement is three to five years away contact the experts at DDSmatch Southwest. When the time comes to sell a dental practice in Texas or New Mexico you need experts on your side who can advocate for you, protect your legacy, and ensure your transition into retirement is successful. Contact our team today by calling 855-546-0044.

Appraising a Dental Practice for Sale

Buying a dental practice is not something you do on a whim. Most dentists considering a transition spend significant time in the planning stages, from the time they first consider making a purchase to when they put an offer on a dental practice for sale. The dental practice you choose to buy will likely become the practice you grow throughout your career, and will be your legacy when you retire. It represents a significant investment, both financially and emotionally, which is why it is important to make sure you buy the right practice for you. 

While there are many factors to consider before purchasing a dental practice, the focus of this article is the appraisal. The appraisal will give you a clear picture of the finances, business model, and inner workings of the practice. This allows you to make an informed decision about whether or not you could succeed after taking over the practice. Below we outline what information you should request when appraising a dental practice.

You may notice we recommend requesting quite a bit of data as part of the appraisal. Is all of this data necessary, and what happens if the practice you are buying does not have the data you ask for? When making a large purchase like this you need a full picture of what you are buying, which is why every little bit of information helps. Most dental practices for sale in Texas and New Mexico have the software necessary to track and store all the information you will need, so obtaining all the data should not be an issue. However, don’t write off a dental practice just because they cannot provide you with every piece of information you request. Raise a red flag, then dig a little deeper to find out why they cannot provide what you are requesting. Are they unwilling to share information? Do they simply not have the tools to track the data you want? Talk to your dental transition specialist and team of advisors for advice on how to move forward, and whether or not to walk away.

Appraising the Facility

The first thing you should do before considering a purchase is visit the physical location. Take a tour of the space and try to picture yourself working there and growing the practice. During and after your visit consider these factors as part of your appraisal.

  • Equipment: What equipment is included in the sale? How old is the equipment? If the doctor putting their dental practice for sale has not upgraded to digital equipment is that a dealbreaker?
  • Expansion Opportunities: Does the space allow for expansion in the next 5-10 years? If you plan on expanding your practice to include more services or additional associates you do not want to be limited by the space.
  • Location and Vision: How does the physical location fit with your vision for the practice? Will it attract the type of patients you intend to direct your marketing to?

As you can see some of the facility details could affect the price, such as the equipment, while others only affect whether the practice will be a good fit. Keep in mind that when you are looking for a practice to buy you may have to compromise in some areas, such as the exact location of your future practice. A certain practice may be a great fit, even if it is a few miles from your desired location, or does not have updated equipment. Talk to your team of advisors for advice on what can and cannot be changed about the physical location and its contents, and how these changes may factor into the sales price. 

Financial Data to Request from a Dental Practice for Sale in Texas and New Mexico

It goes without saying that each appraisal should contain a significant amount of financial information. But what kind of financial information goes into each appraisal? As we mentioned above, requesting as much information as possible will only help you make an informed decision. Modern dental practices typically have the software necessary to track the information you need, and the selling doctor should be willing to share it. Here is the financial information you should have as part of the appraisal:

  • Tax Returns: At least three years of tax returns should be provided.
  • Practice Valuation: A third party valuation performed by an experienced valuator is invaluable in the dental transition process. DDSmatch Southwest works with Blue & Co. to provide accurate practice valuations. For more information on what goes into a business valuation visit this page.  
  • Lease Agreement or Real Estate Appraisal: Does the selling doctor own the real estate? If so, does he or she intend to sell it with the practice or lease it to you after the sale? Buying the real estate is a separate transaction from buying the dental practice. If the office space is currently leased by the selling doctor, find out the terms of the lease and what you need to do to take it over.
  • Cash Flow Model: How much money can you expect the practice to make after your transition? A cash flow model will help you get a good picture of how the business will work for the next five-to-ten years. The model should consider growth rates, factor in both variable and fixed costs, the debt payments needed to finance the transition, and how much you need to support your lifestyle. 
  • Production and Collection Reports: These reports allow you to see the production and collections of each employee, as well as how much revenue each procedure brings in. Knowing the current collections and production will help you plan for the future of the practice, especially if you know which employees plan to stay on after the transition.
  • Aged Receivables Report: How many outstanding payments does the dental practice for sale currently have, and what is the average length of time an invoice is outstanding? Too many outstanding accounts, or a significant amount of time between sending an invoice and receiving payment could indicate the practice is in trouble.
  • Employee List: The salaries and benefits of each employee should be provided in order to give you a full picture of the overhead costs of running the practice.
  • Financing Information: Lenders take two important factors into consideration when deciding whether or not to finance your purchase. First, the creditworthiness of the buyer. Second, the ability of the practice to continue producing enough to cover the loan. In addition, the buyer will need to provide or borrow working capital for the first few months after the transition.

Before moving on from the financial section we want to address what is surely on everyone’s mind when it comes to valuing a dental practice. One of the most frequent questions we have received in the past year is, “how do you know a practice’s true worth after COVID-19?” The value of a dental practice for sale is based partially on production and collections from the last few years. However, these numbers were greatly impacted by COVID-19 as offices were ordered to shut down or only see emergency patients for a time. Now most practices are back open, but production may still be lagging behind what it was in years past. The selling doctor wants to make sure they get what their practice is truly worth, while the buying doctor wants to have confidence the practice will continue to grow. To address these concerns we wrote a piece outlining the way business valuators are handling valuations in this unprecedented time. Learn more by visiting this page

Practice Characteristics to Consider

One of the great things about buying a practice as opposed to building your practice from the ground up is that much of the hard work is done for you. A typical dental practice for sale in Texas and New Mexico has a solid patient base, knowledgeable employees, contracts with insurance companies, and a legacy you can use to build your career upon. However, just because these things exist within a practice does not mean they are being utilized well, or that you are the best fit to carry on the work. Analyzing the patient and practice characteristics below will not only help you determine the practice’s worth, it will also provide insight into whether or not you will be a good fit to take over the practice.

  • Active Patients: How many patients have visited the practice in the last 12-18 months? 
  • Insurance Patients: Of the active patients, how many are on insurance and how many are cash patients?
  • New Patients: How many new patients does the practice bring in each month?
  • Overall Patient Demographics: What age group is most prevalent in the practice? Do most patients come from a specific area code? Demographic information will inform your future marketing efforts.
  • Hygiene Appointments: What percentage of appointments at the dental practice for sale are for hygiene? How significant is the revenue from hygiene appointments?
  • Insurance Adjustments: What insurance companies is the practice currently contracted with? How much does each insurer reimburse, and is there room to negotiate new terms?
  • Fee Schedule: Take a look at the list of procedures and fees associated with them. How do they compare to other practices in the area?
  • Employee Schedules: Review the weekly schedule of each employee, including the doctor and associates, to learn more about the flow of work in the practice.
  • Office Hours: Dental offices can vary in hours of operation. Find out which days and hours the office is open and determine whether or not the schedule suits your personal needs. We do not recommend changing schedules immediately after a practice transition. However, changing the office hours can be done in the long term.

As you can see, a dental practice appraisal is much more than a report detailing how much money the dental practice for sale is worth. There is much to consider beyond the price of the real estate and equipment, and you will likely find yourself pouring over the data trying to decide which factors are most important to you. That is why we recommend working with a team of experienced advisors. A dental CPA, dental attorney, and practice transition specialist will help you determine whether or not a practice is viable, and whether or not you are a good fit for taking it over. Success starts with careful planning, dedication, and knowledge of the process that comes from experience.

Finding the Right Fit

Many of the factors involved in an appraisal dive into both personal and professional territory. If you take on a practice and immediately change the hours, insurance providers, or fee schedule you risk losing your patient base and therefore your cash flow. However, the way you feel about your new practice will flow over to the atmosphere of the office, affecting the patients and staff. If you hate how it was run in the past, but don’t change anything because you worry about losing patients you may lose them anyway because of the new atmosphere. This is why, when you are looking for a dental practice for sale in Texas and New Mexico, it is so important to find the right fit.

At DDSmatch Southwest we focus on matching buyers and sellers in a way that benefits everyone involved. A dentist who lists their practice for sale is listing more than just the physical contents of the practice. They are parting with the legacy they built over many years. They should expect to be compensated in a way that reflects what they spent their career building. In the same way, buyers want to know that the legacy they are buying into will continue to thrive as they pour their time and energy into it. Each party wants a smooth transition and long-term success. With the help of our transition experts, and our clearly established Trusted Transition Process™, buyers and sellers know they can move forward with confidence. When you’re ready to move forward with your dental practice transition contact the experts at DDSmatch Southwest by calling 855-546-0044. 

The First Steps Every Dentist Should Take Before Selling a Dental Practice

After a career spent building a practice, caring for patients, and being an active member in the community many doctors find retirement a bittersweet time. Selling your practice to another doctor brings the fruit of all the hard work you put in, but it is understandable to be cautious about who you sell to. You aren’t simply selling the equipment or real estate, you’re selling your legacy, and watching it live on under another doctor’s care. When it comes to dental practice transitions one thing is certain: it is never too early to start thinking, planning, and preparing for selling a dental practice. Clearly mapping out your transition at least five years ahead of your planned retirement date will not only bring you peace of mind as you move on, it will give you a roadmap to success and help you avoid transition potholes.

If you’re planning a dental practice transition in the next five years you need to start thinking and planning for it now. Below we outline the first steps you need to take to ensure a smooth transition when the time comes.

Set Your Transition Goals

When we ask our clients about their goals during their dental office transition the first thing that comes up is typically the sale price, or net profit they hope to gain. In instances where the selling doctor is retiring the sale price is often driven by what he or she needs to live on after retirement. While this is one of the most important factors when selling a dental practice, it certainly is not the only one. Before listing your dental practice think about these additional factors:

  • Do you want an outright sale? In an outright sale the selling doctor hands over the keys as soon as the deal is done. This type of sale allows you to move on quickly and fully enjoy the benefits of retirement, or whatever is next in your life.
  • Do you want a slower transition out of your practice? Rather than selling outright many doctors decide to take on an associate who will purchase the practice over time in what is known as a buy-in. This gives the selling doctor time to help the office staff and patients adjust to the new owner, and provides a less abrupt life change. Taking on an associate can also help doctors who want to take a step back and slow down their own production without affecting the value of their practice. Learn more about what goes into a buy-in, including the pros and cons you must consider, on our dental transitions blog
  • What are your hopes for your legacy? After years of building a thriving practice it can be difficult to watch someone take on that practice and run it differently. The buying doctor may choose to change the practice’s name, switch which insurance companies they work with, or bring in their own staff. While selling a dental practice always means handing over control to someone new, there are some steps you can take to choose a buyer who will take care of your legacy and your staff. However, choosing a buyer who will run your practice how you want may mean passing up a slightly more lucrative purchase offer. Decide what is more important to you: a buyer with deep pockets or a buyer who will run the practice the way you built it.

It takes time to determine what your priorities are during a sale, which is why it is beneficial to start thinking about your goals early. Talk with your team of advisors and do some research of your own into the benefits and drawbacks of certain types of sales. The DDSmatch Southwest dental transitions blog is a good place to start looking for answers to common transition questions, whether you are on the buying side or the selling side. If you’re headed toward retirement the DDSmatch Southwest Practice Optimizer Experience is another useful tool that will give you concrete steps for a smooth transition into retirement.

During the goal-making phase of selling a dental practice we recommend keeping an open mind about the future, and thinking through multiple options for your eventual transition. Nothing is set in stone, and you still have time to change your mind. You may think you want to hand over the keys and get on with your retirement, but when the time comes to put your plan into motion you find yourself wanting a slower exit. The important thing here is to determine what your priorities are and discuss your options with trusted professionals. Knowing your priorities and options will help you with the next phase of the transition process.

Planning Ahead for Transition Success

When you’ve nailed down the goals for your eventual transition it is time to start planning. Dental practice transitions are complicated and hinge on several factors, some of which may be competing. You need to determine which factors, such as selling or holding on to your real estate, take precedence, and be flexible with the other aspects of the sale. No two transitions are alike, which is why it is so important to work with experienced transition specialists. 

When you are five years away from selling a dental practice it is time to get a practice assessment. Why do you need a practice assessment so far in advance? Assessments, performed by a dental broker or dental business valuator, provide a full picture of your practice and give you an idea of how you can prepare it for a successful sale. Planning ahead gives you plenty of time to make changes in order to get the most from your practice when it is time to sell. 

At DDSmatch Southwest we work with third party business valuator, Blue & Co., to provide accurate assessments. Working with a third party valuator gives some needed distance, as most business owners tend to overestimate their practice’s assets. This isn’t bad, in fact it is expected because of the amount of work, both emotional and physical, the selling doctor has poured into the practice throughout the years. However, it is something to keep in mind when you are selling a dental practice. The experts at Blue & Co. will take an objective approach to valuation, making note of factors such as your practice’s production over the past few years, overhead costs, and equipment included in the sale. Learn more about how practices are valued on our blog. 

What happens when your initial valuation isn’t as high as you would like? There are changes you can make around your office in the years leading up to a sale that will help boost its value. However, not everything you do around the office will result in a higher sales price. For example, repainting your office is typically quick and inexpensive, and gives older offices a fresh look. On the other hand, replacing large pieces of equipment in your office is not worth the money, unless you are bringing your practice up to date with digital technology. Before you make changes to your practice speak to your team of experts about investments that will yield a return when it comes time to sell.

Another factor you need to plan ahead for is your transition timeline. Selling a dental practice means negotiating financial, legal, and real estate details, which can drag on and on if there is not a non-negotiable closing date. In real estate this is called a “time is of the essence” clause. If one party fails to meet the set deadline the deal is off. Your dental practice transition specialist can help you set a non-negotiable closing date that gives the buyer plenty of time for due diligence and negotiations, while still ensuring the process moves swiftly.

However, even with a non-negotiable closing date, it is important to remember each transition is different. Factors such as whether your practice is in a big city or rural area play into how quickly the deal can be done. Again, this is where you need to speak to an experienced professional. In order to get what you want out of the deal you may need to change the schedule. An experienced transition specialist will be able to advise you on whether or not change would be wise. If 2020 has taught us anything it is to be flexible with our expectations.

Selling a Dental Practice With Expert Help

As we’ve mentioned several times, speaking with a team of trusted professionals is essential throughout your transition process. If you’re just getting started you may be wondering who to include on your team of advisors. We recommend at minimum working with a dental CPA, dental attorney, and dental broker. 

Most dental professionals already have a dental CPA helping them with accounting and other financial aspects of owning a small business. If you do not, or you have a CPA who does not specialize in dental practices, it is time to find one. During a dental office transition your dental CPA will be invaluable. They will be able to parse out the tax implications of different types of sales, and help you allocate funds in a way that is advantageous to you now and in the future. This is especially important for dentists moving into retirement and looking to maintain a certain lifestyle. An experienced dental CPA will save you thousands of dollars, and help you avoid costly mistakes.

Next, you need a dental attorney to help in your transition. We recommend using an attorney who works specifically with dental offices rather than a general attorney. The reason for this is that there are many aspects of owning and selling a dental practice that are not present in other industries. There are standard practices your attorney should be aware of, as well as unique situations in each sale they will have to deal with. Working with an experienced dental attorney will reduce your costs as they will already be familiar with the ins and outs of the dental industry. In addition, their in-depth knowledge of dental transitions will protect you from legal issues that can delay the process.

Finally, you need an experienced dental broker. Your broker is your advocate throughout the transition process. They will help you set realistic goals and expectations, and walk you through the process from start to finish. Experienced brokers have been through the process countless times, and know how to make a deal that will benefit everyone involved. 

Your dental practice represents years of time and investment, and carries your legacy. Selling a dental practice is not something you do on a whim, or with frequency. That is why it is so important to choose your team of experts wisely. The right team will not only help you get more out of your practice, they will help you avoid mistakes and roadblocks for a smooth, stress-free transition.

Working with the Transition Experts at DDSmatch Southwest

Your dental practice isn’t simply a job, it is your life’s work. Unfortunately, many dental practice transitions are derailed, the selling doctor doesn’t get the full value of the practice, or their goals are not met because of inexperience. With the right team in place you can avoid these outcomes, and protect your life’s work. 

At DDSmatch Southwest our experienced dental brokers have worked with dentists from around the country helping them set their priorities, reach their goals, and complete their transition process efficiently. Our Trusted Transition Process™ gives clients a clear and consistent roadmap so they can have confidence in the next step of the process.

If you are considering selling a dental practice in the next five years call our office to learn about planning ahead. If you are approaching retirement ask about our Practice Optimizer Experience. This unique service will help you plan for retirement and identify areas of improvement in your practice so you can get the full value of what you’ve built. 

Are you ready for the next step in the process? We’re ready to help you in your journey toward a successful dental practice transition. Call our office today for a free, no-obligation Practice Transition Assessment.

What is Buying a Dental Practice Really Like?

How do you make sure your dental practice transition is successful? Whether you are buying or selling it is important to know the process, and find experts you trust to guide you through it. We recently spoke with Jordan Mortensen, DMD, of Austin, about his experience buying a dental practice in Texas. Dr. Mortensen explains how he was able to acquire a dental practice in just 3 weeks, and why it is essential to have a trusted professional advocating for you during a dental practice transition. 

Q: When did you start looking for dental practices to buy?

Dr. Mortensen: “As a third year dental student, I knew I wanted to buy a practice coming out of school. And so I reached out to several practices that were on the market here in the Austin area and happened to meet Randy Kinnison and Andy Edmister at that time. I’ve basically met every broker in the Austin area. All of them know me by name, and so, coming out of school, I actually closed on a practice with a different broker.” 

Q. After your first experience buying a dental practice in Texas you made plans for growth. How did the experts at DDSmatch Southwest help with those plans?

Dr. Mortensen: “I was planning on making some different growth plans here in the Austin area. And it was right around the COVID time. This is when the state of Texas was shutting down several dental offices. I felt like it was important for me to reach out and see, ‘Hey, what’s the pulse on some of these older doctors in the area that are selling their practices?’ And so I sent Randy a text and I asked him, ‘Hey, anything new going on in the Austin area? If you have a moment, I’d love to hop on the phone with you today.’ He said, ‘Actually, we have a practice that’s a couple blocks away from you that we think you should look into. Andy is there in Austin right now. He’d love to meet with you.’ So I met with him that night and we got a merger done. I merged my practice with this other office where they were representing the selling doctor. We got this merger done within three weeks.”

Q. Three weeks is a short timeline for buying a dental practice in Texas. What role did DDSmatch Southwest play in making it happen so quickly?

Dr. Mortensen: “Having two people that understand the market and understand the needs of the selling doctor. They presented it to me in a way that was very advantageous for me to come in and try to get things done in a very quick, efficient way. They were stellar, so we were able to get this deal done. Not only did they represent the doctor and got the selling doctor what he wanted and helped protect the selling doctor in the value that he brought forth with his practice, but I felt like they were a strong advocate for me and what I was trying to do in growing my practice.”

Q. Did you look to anyone else for advice before or during the process of buying a dental practice?

Dr. Mortensen: “I’ve always been a strong advocate of learning from those that have come before us. I find that I can make all my own mistakes by myself. That’s the importance of having a mentor. So coming into this acquisition, this growth by acquisition if you will, I actually hired a mentor that’s gone through about seven of these acquisitions in his own practice. I basically used the outline of what he’s gone through, step by step. From how he sent out a mailer to all the old doctor’s patients, to the verbiage that he used in that mailer, to even the training for the internal team here to handle the influx of patients and even handling an older doctor. The transition would not have gone as smooth had I not hired an outside mentor to walk me through this growth by acquisition process.”

Q. Even though the team at DDSmatch Southwest worked for the selling doctor, were they also helpful to you during the process?

Dr. Mortensen: “Andy has a lot of experience in managing practices. So, when we closed both of them were also in it for my growth and my experience. And that’s one thing that I’ve loved about them. You know, they’ve constantly checked in and said, “Hey, how are things going? Can we help you out with anything?” And Andy, with a lot of his experience in the dental industry, he has personally said, “Hey, if you need anything, let me know. You know, I’ve got some templates, and different things like that.” I ended up using a different mentor of mine, but they were every bit an advocate for me and my growth in this deal. I very much could have utilized their help in making sure that this acquisition was successful.” 

Q. What was the evaluation process like? Did the team at DDSmatch Southwest give you access to all the information you needed to make a good decision?

Dr. Mortensen “For sure. They got me all of the reports that I needed. They gave me access to the older doctor’s space to make sure that I had done my due diligence. And then they even verified that I had done all the due diligence I needed to make sure I made a smart decision. They were very much strong advocates in making sure proper due diligence was done before we pushed this deal done in three weeks. They said, ‘while, yes, time is of the essence, and we’d love to get this done soon. At the same time, we have to be respectful to you and the due diligence process.’ Like I said earlier, I’ve been in contact with most brokers, it’s kind of what I do. So, I kind of knew coming into it what I was needing. But they met every expectation in regards to what I needed to make an educated decision.”

Q. Has buying a dental practice brought the growth you were looking for?

Dr. Mortensen: “Since we closed in about mid-June, my practice has tripled in growth due to that acquisition. For a lack of a better way to explain it, we’ve gone gangbusters. It’s just been very busy, which is something that I’m very grateful for. I’m very grateful for Randy and Andy for keeping me in the loop. But more importantly for being a strong advocate for me and understanding my desire to grow. And their ability to just keep me in mind. They reached out to me and we got the deal done in three weeks.”

Q. Many doctors are cautious about selling or buying a dental practice in the near future due to COVID-19. Your transition process, however, was smooth and successful. What do you think made your transition go so well?

Dr. Mortensen: “I believe there’s really two types of people out there. I think we’ve all heard the analogy of the glass half full versus the glass half empty. COVID has been a very scary thing, there’s been a lot of unknown things about it. There’s been a lot of things that I think make a lot of us just kind of shake our heads a little bit and ask, ‘what’s going on? Are we really going through this right now?’ And I definitely am a glass half full person, I’m very optimistic. I try very hard to look at different circumstances and look to the positive.

“My first thought was that there are going to be people, companies and individuals, that come out of COVID better than when we went into it. In every event in the history of the world, there are people that look at these opportunities and come out better. I wasn’t going to be one of those that was scared or that was going to look down on it. We followed every rule to the T here in Texas. They shut us down and we shut down. We only saw emergencies, one day a week. We followed every single rule. But the last thing I was going to do was spend my time twiddling my thumbs, waiting to get back to work. And I felt like Randy and Andy, they were in very much the same way. They’ve looked at this like, ‘Hey, you know what, this could be an opportunity to represent some doctors and to help some younger doctors grow.’ 

“I very much appreciate their attitude towards a worldwide pandemic like COVID. They’ve viewed this as an opportunity. An opportunity to help doctors grow, help them cash in on the value by selling their practice, and maintain their value during the selling of their practice. I’m just thankful that I was one of the doctors that they were able to reach out to, that they were able to sell one of their practices to.”

Q. After buying a dental practice with the help of DDSmatch Southwest what are some of the impressions you have of their team? 

Dr. Mortensen “You know, the one thing that I have loved about Randy and Andy, and seriously, I’ve talked to every broker here in the Austin area, but one thing that I have loved about them is their transparency. They’re not hiding anything. If I asked them, ‘Hey, is there another buyer behind me if I can’t pull this trigger?’ They’re like, ‘Absolutely, we’ve got two lined up.’ Transparency is everything. I believe those that could really benefit from Randy and Andy and their services are those that appreciate transparency, that appreciate straight talk. Letting them know, ‘Hey, this is what this deal is. This is what this doctor is expecting.’ 

“They’ll also go to bat for you. If you’re the buyer and you’re looking for something else, they will try to help prime the seller to make sure both parties meet. They’re a strong intermediary and advocate for both sides. Randy and Andy were very helpful in just helping me learn about the buying process. They are just classic West Texas; just good people. And it’s just nice to work with people that care about others. But more importantly, they just really stand by their work. They want to make sure that both parties are having a good experience. While, yes, they represent the selling doctor, I also felt like, in many ways, I had an advocate on my side.”

Q. Would you recommend DDSmatch Southwest to other dentists considering selling or buying a dental practice?

Dr. Mortensen: “Honestly, I think if dentists are looking for somebody to represent them, I don’t think they could find a better team to represent their practice than the two of them. They are very transparent and they are looking to achieve what the doctors want. You know, the doctor that I did this acquisition with, he needed to be out in a month and they said, ‘Well, let us try our best.’ It was advantageous for me, but it was also advantageous for the selling doctor in the sense that they represented him and met his goals. They’re there to help the selling doctors, represent them in their goals and desires, and they do it in a very transparent and honest way.”

Planning a Dental Practice Transition?

As Dr. Mortensen points out, successful dental transitions are due in large part to the team of experts advising you. This is true whether you are selling or buying a dental practice. Find an experienced dental CPA, dental attorney, and transition specialist such as those at DDSmatch Southwest. With the right team advocating for you and helping you clearly define your goals, everyone will benefit from the transition.

At DDSmatch Southwest we focus on making the transition process advantageous for everyone involved. Through our Trusted Transition Process™ sellers feel confident their practice is in good hands, and buyers know they are buying a practice that will provide stability and room for growth. If you are considering selling or buying a dental practice in the next five years contact our team to start planning now.

Preparing for Retirement: What You Need to Know Before Listing Your Dental Office for Sale

As a small business owner, planning for retirement includes much more than saving money in a retirement account. For dentists who are reaching the end of their careers and trying to plan well for retirement, knowing the current market trends is vital. It is the first step they should take before deciding when to list their dental office for sale.

ADA Statistics About Retirement

The ADA reports on the average age of dentists, and can offer those reaching retirement age a roadmap to retirement. According to a Dental Workforce Study the average age of United States dentists in 2015 was 50 years old. This number is up from an average of 48 years old in 2005. In addition, the average age of retiring dentists in 2015 was 68 years old, also up from 66 years old in 2005. What do these statistics tell us? While most dentists are waiting a little longer to retire, almost half of all dentists currently practicing will reach retirement age in the next 10 years.

With so many dentists reaching retirement age soon, the market is expected to be flooded in the next five to ten years. If you are one of these dentists you must start planning and strategizing now for your retirement so you don’t put your practice on the market at the wrong time. In fact, your practice is likely worth more today than it will be in 2025 when more doctors decide to list their dental office for sale.

Answering Questions About Retirement

We address some common questions and concerns dentists approaching retirement age have below. However, these questions and answers are helpful to dentists at any stage. Even if you are not reaching retirement age in the next five years it is a good idea to think through these questions and create a retirement plan.

How much is my practice worth?

Finding the true value of your dental practice is a complex process. While you can find plenty of general rules or calculators for finding your practice’s worth, these estimates are largely inaccurate. To find your practice’s true value you need to speak to a dental practice transition specialist. Specialists, like those at DDSmatch Southwest, take into account a wide variety of factors when determining your practice’s worth. Our team works with dental CPAs and business valuation experts with experience in the local Texas and New Mexico market to determine your practice’s value and help you get the most out of your sale.

Is adding an associate a good idea?

Many dentists aren’t ready to put their dental office for sale, but do want to cut back on their hours. Adding an associate can help dentists who desire a slower transition out of their practice. However, it is important to consider whether or not your practice can financially take on an associate. The DDSmatch Southwest transition specialists can help you determine whether or not your practice is prepared to take on an associate, and help you find the right one when you’re ready. Whether you’re adding an associate as a retirement strategy, or simply want to grow your practice, talk to the DDSmatch Southwest transition specialists to get the process started.

Is it a good idea to sell to a DSO?

A Dental Service Organization, or DSO, will manage the non-clinical work in a dental practice. There are several pros and cons to selling to a DSO, and it is a highly personal decision. Owning a dental practice means managing a lot of business decisions in addition to handling the clinical work of dentistry. If you dislike managing the business side of things, selling to a DSO rather than listing your dental office for sale to another private practitioner may be a good option. It can also make your practice more attractive to associates, because these practices often pay more than private practitioners. 

However, a DSO’s management will be different and many dentists find it difficult to watch how the practice they built changes under new management. If you’re curious about more pros and cons of selling to a DSO visit this post by a dental and medical law firm

How can I find a buyer?

If you decide not to sell to a DSO, how do you find the right buyer? For dentists practicing in Texas and New Mexico, DDSmatch Southwest helps match buyers and sellers. The Trusted Transition Process used by the DDSmatch Southwest practice transition specialists will determine how much your practice is worth, as well as your wants and needs as a seller. Then, we find a buyer with the skill set, experience, and personality to take on your practice and continue your legacy. If you’re considering listing your dental office for sale speak to one of the dental practice transition specialists at DDSmatch Southwest for more information about this process.

How do I prepare for retirement?

If your retirement is three to five years away now is the time to start planning. A financial advisor can help you determine whether or not you have enough money set aside to retire with the lifestyle you desire. Read this dental economics post for more information on planning to retire on time. After creating a personal financial plan speak with a dental transition specialist, such as the experts at DDSmatch Southwest. They will help you create a step by step plan to guide you smoothly through the years before retirement. 

What if I own real estate?

If you own the real estate your dental office sits on, you should know that the deal you make when you list your dental office for sale does not automatically include that real estate. If you choose to sell both the practice and the real estate at the same time it is not a difficult process, but that could change who your buyer is as the buyer will likely need financing for both transactions. While separate, both transactions can often be closed at the same time, making the process easier for both parties. 

What if you don’t want to sell your real estate? Another option is to keep the real estate and start collecting rent. This post reviews the options available in more detail so you can make an informed decision. You should also sit down with your dental CPA and dental attorney to discuss the tax implications, and how owning the real estate will affect your lifestyle and budget.

When should I sell to get maximum value?

There is no straightforward answer to this question, as it must be answered on a case by case basis. The values of dental practices, and local market trends, vary greatly. However, taking into consideration the ADA statistics shared above, listing your dental office for sale before the market floods with retiring doctors will help you get the maximum value. The best course of action is to speak with a dental practice transition specialist with experience in the local market. Your transition specialist will be able to advise you on when to sell your practice for maximum value.

What do I do if my partner won’t buy me out?

Dental practice partnerships have many benefits, but they can also make things more complicated when there is a transition. However, DDSmatch Southwest also helps dentists sell part ownerships. We match dentists wanting to sell a part ownership with buyers who wish to buy into a partnership. To learn more about the process of selling a part ownership, and get your specific questions answered, schedule a consultation with our dental practice transition specialists.

Who can I trust to help with my transition?

After a lengthy career you need a trusted advisor to help you get the most out of your sale, while also protecting your legacy. Before listing your dental office for sale it is important to find a dental practice transition specialist with years of experience in the local market, and a proven track record of successful transitions. In Texas and New Mexico dentists trust the specialists at DDSmatch Southwest. Our team of transition specialists will guide you through the process, so your transition into retirement is as smooth as possible.

Think Ahead Before Listing Your Dental Practice

At DDSmatch Southwest we do much more than simply list your practice when you’re ready to sell. Our Practice Optimizer Experience helps you realize the fair market value of your practice and determine whether or not you are ready to enjoy retirement. The Practice Optimizer Experience prepares you with these services:

  • Conceptual Transition Experience: Create goals and strategies that will help you map out your road to transition and retirement.
  • Trusted Valuation Analysis: Two valuations, one at the beginning of the process and one when you are ready to list your dental office for sale, give you a clear picture of the value of your practice.
  • Dental Insurance Navigator: With our insurance advising partner you will get advice on new insurance plans to consider, plans to discontinue, and more.
  • Clinical Opportunity Blueprint: We analyze your practice and provide you with a blueprint for potential additional earnings.
  • Critical Metrics Analysis: A customized practice report on critical items is provided, with annual reviews and updates until your transition is complete.

In addition to these services the Practice Optimizer Experience also includes services for overall retirement planning including:

  • Ideal Retirement Calculation: In order to establish the best timeline for your retirement we offer a financial review of your investments and future income projections. This can be done either in tandem with your financial advisor, or as a third-party supplement.
  • Estate Preparedness Gameplan: We refer our clients to a local attorney with experience in estate planning in order to create or update important legal documents. These documents are essential to protect you, your family, and your practice’s assets and value in the case of an unexpected death or disability. 

Listing your dental office for sale takes planning and preparation. If you are considering retirement, or will be retiring in the next five to ten years, now is the time to sit down and consider your options. Carefully planning now will ensure a smoother transition down the road. To learn more and set up a consultation contact the dental practice transition experts at DDSmatch Southwest today.

A Step By Step Guide to Prepare Your Dental Practice for Sale

When you began your career in dentistry you were no doubt optimistic about where it would lead you. However, as 2020 has reminded us all, life-changing events that are out of your control can change the course of the future you planned. You may even have friends and colleagues who planned well in advance to finish their career strong, only to be caught off-guard by an unexpected illness or injury that caused them to put their dental practice for sale sooner than anticipated.

While we acknowledge that there are plenty of circumstances beyond our control, we can also plan as best as possible for whatever life brings our way. We can take into consideration best and worst case scenarios, and recognize there are no guarantees when it comes to the future. This way, if an emergency arises forcing you to sell your practice early, you will be ready.

Below we share five steps every dentist should take now to help prepare your practice for an emergency sale.

Step One: Thinking About Every Scenario

You have likely heard the phrase, hope for the best but plan for the worst. We all eventually come to the realization that we do not control everything that happens to us. An accident, illness, or even the careless actions of others can alter the path we are on. So, while you hope to be able to retire strong after a lengthy career, you should also plan for unexpected circumstances that may cause you to put your dental practice for sale. 

Obviously, it would be impossible to plan for every unknown situation, but thinking through some “worst case scenarios” and planning generally for them will give you and your loved ones peace of mind. It is always better to be over prepared than underprepared. That is why the first step is to simply set time aside to think through uncertainties you could face in the future.

Step Two: Defining Your Retirement Goals

When you start planning for retirement, rather than thinking about how many years you want to work before you retire, you should think about what you need to get out of the sale of your practice in order to retire well. If an emergency arises forcing you to sell your practice early you need to be able to live the life you planned and support your loved ones. Your retirement plan should be reasonable and attainable. In order to do this, you must plan ahead and work with a team of experts.

First, if you do not already have a trusted dental CPA or dental attorney, don’t wait until you are listing your dental practice for sale to find one. Next, a dental practice transition specialist, such as DDSmatch Southwest, should be part of your planning team. Other experts that you may want to add to your team are an insurance advisor and practice consultant. If you’re wondering how to find trusted team members try reaching out to your dental practice transition specialist. The team at DDSmatch Southwest can refer you to one of our strategic partners, based on our experience working with dentists in Texas and New Mexico.

After gathering your team of experts, you can work to determine the amount you need to net from the sale of your practice. Your dental CPA, practice consultant, and insurance advisor will look at your practice’s financials to decide if your practice can bring in that number, or if you need to make some changes to increase its value. They may advise an increase in cash flow or collections to help you reach your goal. They will also be able to help you identify which changes, investments, or growth opportunities will bring in the best returns, while also minimizing costs and taxes.

Step Three: Maximize Value Before Listing Your Dental Practice for Sale 

If you need to expand your practice in order to meet your retirement goals make sure you invest well. One common mistake dentists make is to invest in certain aspects of their practice without protecting their current assets. Your team of experts will help you determine how to invest in a way that brings value, without losing any of your current value.

Cost cutting is a big issue for any dental practice looking to expand. It is important to free up money to invest in expanding your practice, which will provide more income down the road. Remember that when it comes to cutting costs it pays to have an open mind and be creative. Take a look at things like your insurance, tax planning, and how you protect your assets. Make a plan with your advisors to cut costs and maximize value, without burdening your practice or putting your savings or income at risk.

This step is not only about increasing your cash flow, but also making sure you’re prepared to list your dental practice for sale unexpectedly. Increasing cash flow can be done in several ways including growing your patient base, improving patient retention through customer service, and increasing treatment plan acceptance. One often overlooked way to increase your cash flow is to review your fee schedules and renegotiate with insurance providers. A professional insurance advisor can help you increase your revenue by up to 10% simply through these negotiations. 

The final aspect of this step is to support your staff. Make sure your office has a positive culture, and inspires your staff to be committed. When it comes time to transition your dental practice, communicate clearly with your staff and work to ensure they stay on through the process.

Step Four: Determine the Type of Sale You Want

This step may change based on the timing of your sale, and the personal circumstances surrounding it. However, you should have a general idea of whether you want to list your dental practice for sale outright, or take on an associate with a buy-in agreement.

Not sure which type of sale is best for you? In an outright sale you will receive a lump sum payment for the value of the practice. These dental practice transitions are typically faster and less risky financially. However, there are a few things you must watch out for during an outright sale:

  • The deal isn’t done until you close escrow. While you still own the practice, even after you have a closing date planned, don’t move into retirement mode or slow down production.
  • Hiding information, especially bad information, from the buyer is a bad idea. They will eventually find out, and when they do you will lose their trust.
  • Know the difference between hiding information and keeping confidential information safe. If you aren’t sure what is appropriate to share with the buyer or your staff speak with your team of advisors.
  • Remember you don’t need to take the first bidder who comes along after you list your dental practice for sale. Finding a buyer who will uphold your legacy is important. The dental practice transition specialists at DDSmatch Southwest match buyers with sellers who are like-minded, making the transition smoother.
  • Don’t rush to market your practice before it’s ready. A business valuator (such as Blue & Co., a DDSmatch Southwest strategic partner), a transition specialist, or a dental CPA can offer advice on ways to maximise value before you list your practice.

If you know you aren’t ready to stop working, an inside transfer may be the right path for you. You can sell your practice to an associate over a period of years, rather than all at once. Three to five years is typical, and allows you time to grow the practice and take time for yourself. 

However, just like listing your dental practice for sale outright, it is important to watch out for a few things with a buy-in agreement. Most importantly, you need a lawyer who is experienced in these situations. Create an agreement that clearly lays out the terms of the transition such as when it will take place, how the value will be measured, how everyone will be compensated, and the conditions under which the agreement can be cancelled.

Step Five: Planning for the Unknown

Create a Contingency Plan for Your Practice

The four steps we laid out above apply to any dentist planning a sale in the future, on their own terms. This step, however, is all about how to prepare for an unexpected transition, one that happens on life’s terms. A sudden injury, disability, or death does not have to mean your practice’s value suffers. By planning well you can protect the value of your practice, and ensure it continues to operate at the highest possible level. That way, you and your family will get the full value when you list your dental practice for sale, and your employees and patients will continue to be cared for.

Your contingency plan may include a buy-sell agreement. In this agreement a formula is agreed upon to sell a share of the business to a company or the remaining members of the business if the owner dies or leaves. Life insurance and disability insurance can also be used in these situations. For instance, the proceeds of the insurance can be used to hire an associate to run the practice until completion of the sale.

Creating a contingency plan is one of the reasons we recommend working with a team of experienced dental practice transition specialists. Knowing what to do when a dental practice must transition under unexpected circumstances is part of the job, and your team will likely have experience in this area. Ask your team to use their expertise and put together a plan to protect your loved ones and your legacy.

Create a Contingency Plan for Yourself

Estate planning is never fun, but always necessary. It is especially important to review your estate when you are planning to list your dental practice for sale. If you have not already reviewed your own affairs with a dental lawyer or CPA, now is the time to get everything in order. If you made a plan years ago it is a good idea to revisit it with your advisors to ensure your plan still meets your needs. Your current financial situation should be able to cover your family’s needs, and cover the costs of long-term disability should that become necessary. If your current assets will not cover these costs look at life insurance and disability insurance to make up the difference. However unpleasant it is to think about, you should also include important documents like a power of attorney and an advance medical directive so your family knows your wishes should the worst happen.

Start Planning Now for a Successful Dental Practice Transition

At DDSmatch Southwest our goal is to help dentists successfully transition their practices, and we have been meeting that goal for years. Our expertise plays a big role in this success, and has helped us create a proven process for dentists who are listing their dental practice for sale. Each new practice we work with helps us revise and perfect our process with new information and important insights gained.

One process we use is the Practice Optimizer Experience. This program is excellent for dentists who are trying to prepare their practice for the unexpected. Whether or not you are considering a sale in the near future, this program can give you invaluable insight into how to optimize your practice for best performance. The program includes:

  • Conceptual Transition Experience: What will your transition look like? We help you visualize and set goals for your transition, and create strategies that will help you make them a reality well ahead of your planned transition.
  • Trusted Valuation Analysis: As part of your wealth management planning, we will analyze your practice two times. First, at the beginning of the process. Second, when you are ready to start your transition.
  • Ideal Retirement Calculation: A financial review of your current status and future income projections will establish the ideal timing for listing your dental practice for sale. If you already have a financial advisor this step can be performed in tandem with them, or as a supplemental third-party opinion.
  • Estate Preparedness Gameplan: Sit down with a local attorney to discuss your will, trusts, and estate planning. You should also review or update any essential legal documents that have bearing on your practice assets should you suffer from an unforeseen death or disability.
  • Dental Insurance Negotiator: Our partner Shelley DeGroff of Integrative Dental Solutions, a PPO Advisor, will review and consult with you on the dental insurance plans you currently work with. Ms. DeGroff will offer advice on new insurance plans to consider, or plans to discontinue, in order to maximize your practice’s value and cash flow.
  • Clinical Opportunity Blueprint: We analyze your practice to determine if there are underutilized earning opportunities. In our report you will see a blueprint of opportunities to help you achieve maximum growth before listing your dental practice for sale.
  • Critical Metrics Analysis: Our customized practice report provides information about critical items, and acts as a guide to keeping your practice at high levels of production. Your practice is always changing, which is why we provide an annual review of the results of our analysis. 
  • Trusted Transition Process: Sooner or later you will need to transition your dental practice. Our Trusted Transition Process guides you during this time, and helps you protect your legacy. Our complete range of professional services make dental practice transitions smoother by providing trustworthy information and advice from start to finish.

Dentists often hear they need to start planning for a transition three to five years ahead of time. However, it is never too early to start preparing for an emergency. At DDSmatch Southwest our team of dental transition specialists is prepared to help doctors putting their practice for sale, or those simply wanting to plan for emergencies. With our Practice Optimizer Experience you can set goals and create a roadmap for your future. Contact us today to learn more.